TIDMASC
RNS Number : 0349I
ASOS PLC
12 April 2022
12 April 2022
ASOS Plc
Global Online Fashion Destination
Interim Results for the six months to 28 February 2022
Accelerating operational and strategic progress
-- Delivered 4% revenue growth (constant currency) and GBP14.8m adjusted
profit before tax, both in line with guidance, despite industry-wide
supply chain constraints impacting stock availability and ongoing COVID-19
restrictions
-- Strong operational progress delivered year to date, with H2 stock position
materially enhanced, driving increased newness and availability
-- Encouraging progress on the implementation of the strategy outlined at
the Capital Markets Day (CMD); centred on driving a more customer-centric
organisation, accelerating pace of delivery across the Commercial function,
and increasing emphasis on Data and Digital Product
-- Save for the removal of Russia's contribution to H2 following the decision
to suspend sales announced on 2 March 2022, guidance remains unchanged
although an increasingly challenging external environment introduces
a greater degree of risk than normal
Summary financial results
Six months Six months CCY(2)
GBPm(1) to to Change Change
28 February 28 February
2022 2021
-------------------------------- ------------- ------------- --------- --------
Group revenues(3) 2,004.1 1,975.9 1% 4%
Gross margin 43.1% 45.0% (190bps)
--------
Operating (loss)/profit (4.4) 109.7 (104%)
--------
Operating (loss)/profit margin (0.2%) 5.6% (580bps)
Adjusted EBIT(4) 26.2 116.2 (77%)
Adjusted EBIT margin (4) 1.3% 5.9% (460bps)
Adjusted profit before tax(4) 14.8 112.9 (87%)
Reported (loss)/profit before
tax (15.8) 106.4 (115%)
Diluted earnings per share (13.5p) 81.9p (117%)
Net (debt)/cash(4) (62.6) 92.0
-------------------------------- ------------- ------------- --------- --------
(1) All numbers subject to rounding throughout this document,
(2) Constant currency is calculated to take account of hedged rate
movements on hedged sales and spot rate movements on unhedged
sales. Any reference to total or retail sales throughout the
document is on a constant currency basis, (3) Includes retail sales
and income from other services, (4) Definitions of the adjusted
performance measures used above and throughout this document can be
found in Note 12, page 33 of the Condensed Financial
Statements.
Results Summary
-- 4% revenue growth (CCY), as expected supply chain constraints impacted
newness and stock availability
-- Continued increase in active customers to 26.7m, up 0.3m over six months,
with slower customer growth a result of cycling a period of exceptional
customer acquisition in the prior year when High Street retail was closed
-- Despite reduced stock availability impacting growth across all regions,
both the UK (+8%) and US (+11% CCY) delivered a strong performance, with
the US supported by a particularly strong peak trading period; EU remained
subdued (+1% CCY) as COVID-19 restrictions impacted demand and RoW declined
(-10% CCY) as delivery challenges continued
-- Gross margin decreased by 190bps reflecting increased clearance activity
and elevated freight costs; partially offset by cost efficiencies that
delivered improvements in buying margins along with low to mid-single
digit percentage increases across both ASOS and partner brands taking
effect in January 2022
-- Adjusted PBT of GBP14.8m reflecting the expected unwind of all COVID-19
related benefits (GBP48.5m) from H1 FY21 and planned investment in marketing;
alongside significant cost inflation, most notably warehouse labour and
freight, partially offset by cost efficiencies of c.GBP50m
-- Reported revenue growth of 1% and reported loss before tax of GBP15.8m,
reflecting costs of adjusting items which total GBP30.6m
-- Net debt position of GBP62.6m reflecting negative working capital cycle
in H1, amplified by accelerated stock build for '22 Spring / Summer to
accommodate longer lead times and capital expenditure of GBP86.5m to
support supply chain and technology investments outlined at the CMD
Operational & Strategic Update
-- Strong operational progress in the first half of the year and ASOS enters
the second half with a much-improved stock position driving increased
newness and availability
-- Leverage ASOS' Platform & Capabilities:
o Successful roll out of Partner Fulfils in the UK in H1 to be
followed by range extension and expansion to select countries
within Europe by end of FY22
o Highly successful optimisation of the Premier offer,
supporting 24% growth in Premier subscribers
o Continued improvements in data science to further personalise
the experience, and next phase of data evolution and investments
underway in support of the Data Strategy
-- Amplify ASOS' Winning Offer:
o Continued triple digit sales growth of Topshop brands (+193%
year-on-year), particularly strong across the UK, US and
Germany
o Completed the reorganisation of the Commercial function to
accelerate the pace and intensity of delivery, including the
creation of 12 new business units centred around brands,
geographies and emerging channels, providing increased autonomy and
pace of decision making
-- Driving International Expansion:
o Roll out of broad reach marketing campaign across multiple
platforms in test areas within the UK, US and France
o Debut of select ASOS brands in two Nordstrom stores and on
Nordstrom.com in November with further extensions to two new retail
concepts in store in February
-- Expansion of Executive structure to better align teams for delivery of
the strategy; with newly created Strategy Board, led by COO and underpinned
by expanded Executive team
Fashion with Integrity Update
-- ASOS today published its first annual update as part of its FWI 2030
Programme, reporting progress in the period ending August 2021
-- The full report is published here
Outlook
-- Save for the removal of Russia's contribution to H2 following the decision
to suspend sales announced on 2 March 2022, guidance remains unchanged
-- More challenging external environment since guidance was provided in
October 2021
-- Greater risk in H2 than normal as the full impact of recent inflationary
pressure on consumers and the potential impact on discretionary spend
are yet to be felt
-- Despite the external challenges, ASOS anticipates sales growth to accelerate
in H2 supported by:
o Improved stock profile
o Easing of comparative growth rates
o Return of event and holiday-led demand
o Increased marketing investment to support international sales
acceleration
o Improved lead-times as supply chain constraints ease
-- ASOS looks to the future with confidence and remains committed to the
execution of its medium-term strategy in support of long-term growth
acceleration
Mat Dunn, COO and CFO, said:
"ASOS has delivered an encouraging trading performance, against
the continuing backdrop of significant volatility and disruption.
The team has acted with determination and pace and is making good
early progress on the strategic plan for the next phase of growth,
as set out at our CMD last year. While much remains to be done, we
have a clear plan for each of the three key pillars - our platform,
consumer offer, and international expansion - and are already
seeing positive signs of progress across the business. We're
confident of the benefits these efforts will create and our
continued ability to deliver.
"We've entered the second half of the year well placed, and
believe that our stock position, with increased product
availability and newness, will stand us in good stead. We remain
mindful of the potential impact on demand from the growing
pressures on consumer spend and will continue to be responsive to
any changes in market conditions as we progress the work started in
the first half to deliver on our ambitions."
Investor and Analyst conference call and presentation:
The Company will be hosting an in-person presentation for
analysts and investors starting promptly at 09:30 at ASOS HQ,
Greater London House, NW1 7FB, to be hosted by Mat Dunn and Katy
Mecklenburgh. For those unable to attend in person a live webcast
will be available, and a recording of the presentation will be
uploaded to the ASOS investor relations website afterwards.
To access live please dial +44 (0) 330 088 5830, and use Meeting
ID: 895 3501 6492. A live stream of the event will be available
here .
For further information:
ASOS Plc Tel: 020 7756 1000
Mathew Dunn, Chief Operating Officer & Chief
Financial Officer
Taryn Rosekilly, Director of Investor Relations
Website: www.asosplc.com/investor-relations
Headland Consultancy Tel: 020 3805 4822
Susanna Voyle / Stephen Malthouse
JPMorgan Cazenove
Tel: 020 7742 4000
Bill Hutchings / Will Vanderspar
Numis Securities Tel: 020 7260 1000
Alex Ham / Jonathan Wilcox / Tom Jacob
Berenberg Tel: 020 3207 7800
Michelle Wilson / Jen Clarke
Background note
ASOS is a destination for fashion-loving 20-somethings around
the world, with a purpose to give its customers the confidence to
be whoever they want to be. Through its app and mobile/desktop web
experience, available in ten languages and in over 200 markets,
ASOS customers can shop a curated edit of over 100,000 products,
sourced from nearly 900 global and local partner brands alongside a
mix of fashion-led own-brand labels - ASOS Design, ASOS Edition,
ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss
Selfridge and HIIT. ASOS aims to give all of its customers a truly
frictionless experience, with an ever-greater number of different
payment methods and hundreds of local delivery and return options,
including Next-Day Delivery and Same-Day Delivery, dispatched from
state-of-the-art fulfilment centres in the UK, US and Germany.
Important information
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
ASOS Plc ("the Group")
Global Online Fashion Destination
Interim Results for the six months to 28 February 2022
Overview
ASOS delivered results in line with guidance with total sales
growth of 4% on a constant currency basis (CCY) (1% on a reported
basis) and adjusted Profit Before Tax of GBP14.8m (reported loss of
GBP15.8m, after GBP30.6m of adjusting items).
In the first half of the year, supply chain disruption played
out as expected with capacity constraints across both sea and air
freight causing delays and inflating costs. The demand environment
was also impacted by increased COVID-19 caseloads and sporadic
lockdowns, particularly in Europe, along with a rebalancing of
demand between online and offline channels. Despite this, ASOS
delivered a successful peak period, particularly in the US, and
successfully launched its fourth fulfilment centre to increase
stockholding and optimise availability. The scale-up of this
facility has progressed more quickly than anticipated, adding
incremental capacity during peak, and performing ahead of original
capacity expectations. ASOS has made strong operational progress in
the first half of the year and approaches the second half with a
much-improved stock position along with increased newness and
optimised stock availability. Returns rates have picked up in P2,
however they have not exceeded pre-pandemic levels as sales mix
returns to a more traditional balance of product demand.
Active customers have grown by 0.3 million since year end to
26.7 million, reflecting 7% growth year-on-year with 1.8 million
net additions over the past 12 months as ASOS cycled a period of
strong customer acquisition in the prior year aided by lockdowns
and store closures which drove customers online. With the reopening
of physical stores, ASOS has seen a rebalancing of demand between
online and offline channels as customers have returned to the High
Street, whilst the impact of reduced product availability and the
resulting impact on newness has also affected new customer
acquisition in the first half. Pleasingly though, online share of
overall sales remains higher than pre-pandemic levels in all key
territories, and ASOS has seen improvements in frequency and
conversion as customers have increasingly engaged with more aspects
of the offer.
In November, the ASOS leadership team presented a full Capital
Markets Day (CMD), outlining the change required to shift the
Company to the next phase of its growth, centred on accelerating
growth outside the UK. ASOS has proceeded at pace to roll out this
strategy, known internally as 'ASOS Reimagined', in support of the
CMD objectives. Additionally, ASOS has accelerated its
organisational re-design in support of these objectives to improve
the pace and delivery of the Commercial function whilst elevating
its focus on Data and Digital Technology Product.
Financial Performance
ASOS delivered against its first half guidance of mid-single
digit sales growth, with adjusted Profit Before Tax of GBP14.8m and
an adjusted PBT margin of 0.7%. This reflected the unwind of all
COVID-19 related benefits received in H1 FY21 of GBP48.5m as
expected, as returns rates normalised and the Company saw increased
demand for going-out product. Furthermore, ASOS delivered adjusted
EBIT of GBP26.2m, representing an adjusted EBIT margin of 1.3%,
which was a 460bps decline year-on-year and a 210bps decline after
excluding the COVID-19 related benefits from the prior year
comparative.
Gross Margin reduced by 190bps in the first half of the year,
driven by increased rates of clearance to shift slow-moving and
late arriving Spring/Summer stock that was left over at the end of
the prior season, along with elevated freight costs as a result of
supply chain constraints. This was, however, an improvement on P1
gross margin performance (-400bps versus last year) with the
improvement in P2 driven by pricing benefits as low to mid-single
digit percentage price increases across ASOS and partner brands
took effect to mitigate cost inflation; along with sourcing
benefits driving an improvement in buying margins.
ASOS has faced significant inflationary pressures as the
industry wrestles with the increased cost of warehouse labour,
freight and delivery costs. The Company has looked to offset these
across the year through continued cost efficiencies and scale
leverage and is pleased to have delivered c.GBP50m in operational
efficiencies in the first half to largely offset both forecast and
shock cost escalations. Despite these short-term cost pressures,
ASOS has continued to invest to capture the significant long-term
opportunities by increasing its marketing investment to 6.0% as a
percentage of sales, up from 5.5% in the comparator period.
The net debt position of GBP62.6m reflects ASOS' typical working
capital outflow in H1, however this was amplified by an accelerated
stock build for '22 Spring / Summer, to accommodate longer lead
times and mitigate supply chain constraints, as well as the delayed
intake of '21 Autumn / Winter stock which is held in storage for
'22 Autumn / Winter. Capital expenditure was GBP86.5m in support of
the supply chain and technology investments outlined at the CMD as
part of ASOS' medium-term strategy. This includes capital
expenditure in support of the automation programmes at Lichfield
and Atlanta, both expected to complete by the end of FY23, along
with technology investments into the customer experience and data
capabilities.
Performance by Market
UK
After an exceptionally successful FY20 and FY21 in the UK, the
first half presented a period of tough comparatives.
Notwithstanding this, total sales grew a pleasing 8% to GBP895.5m,
despite cycling a period of lockdown restrictions which caused the
closure of hospitality venues and physical retail stores last year,
particularly in P2. The expected reduction in stock availability
and newness, driven by supply chain constraints, weighed on
performance. Additionally, Omicron-related uncertainty drove
weakness around big sale events in January which further impacted
growth. Demand for going-out wear continued its recovery despite
Omicron uncertainty over the Christmas period, and has been further
supported by the removal of all COVID-19 restrictions in
February.
Despite these factors, ASOS added a further 1m new customers
year-on-year, with 0.3m new customers added since FY21.
Furthermore, ASOS delivered growth in orders, visits, and average
order frequency as well as improvements in conversion. The number
of Premier subscribers grew by 23% supported by a global Premier
Party in October, and a Premier Day in the UK in February.
EU
Europe delivered revenue growth of 1% CCY to GBP577.4m, as the
region was particularly impacted by supply chain constraints which
in turn impacted on stock availability, along with continued
COVID-19 restrictions throughout much of the period as Delta and
Omicron waves hit the region. Germany performed well in the first
half of the year, driven by increased demand for going-out wear,
however this was offset by a weaker trading period in France where
the return of customers to the High Street was more pronounced.
Pleasingly, Premier subscribers grew by 13% with subscriptions in
Germany (+41%) and Ireland (+91%) reflecting substantial growth,
with Ireland's growth supported in part by the Premier Day in
February.
While Average Basket Value (ABV) stepped back and visits
remained flat, orders and average order frequency grew, and
conversion improved. Active customers grew by 6% year-on-year,
however remained broadly unchanged since FY21.
US
The US delivered revenue growth of 11% CCY to GBP252.7m. This
was particularly pleasing against a backdrop of supply chain
constraints and port congestion which impacted ASOS' ability to
effectively stock its fulfilment centre in Atlanta, and resulted in
low stock availability in high demand categories. Despite these
challenges, a strong promotion programme and underlying demand
generated the highest ever peak sales month in the US in November.
Furthermore, February also saw strong customer engagement supported
by successful Superbowl, Single's Day and Presidents' Day events.
ASOS expanded its Wholesale business in the US further, as the
existing strategic partnership with Nordstrom included products
from ASOS Design online and in select Nordstrom stores, with
wholesale sales supportive of overall growth in the US during
H1.
Active customers grew by 6% year-on-year to 3.5m customers, and
remained broadly flat versus year-end, with a 58% growth in Premier
subscribers. Total visits stepped back year-on-year, however
conversion, constant currency ABV (CCY ABV) and average order
frequency increased reflecting a more intentional shopping visit.
Whilst it is still early days, these trends show that customers are
engaging with more parts of the ASOS offer, including Premier, and
additional categories such as Face + Body and Sportswear.
Rest of World (RoW)
RoW total sales declined by 10% CCY versus last year to
GBP278.5m, as low stock availability impacted all markets and
delivery lead times remained a constraint, particularly to
Australia and Israel. In addition to this, demand in Australia was
weaker as the country began to exit lockdown from September and
customers returned to the High Street. Consequently, both orders
and visits declined and ABV stepped back driven by higher
markdown.
RoW active customers were flat, but Premier subscribers grew by
45% year-on-year, supported by the resumption of the Premier offer
in Australia. Growth in the customer base was also constrained by
the extended delivery proposition and lower levels of stock
availability impacting consumer choice and newness.
As announced in the RNS on 2 March 2022, sales in Russia have
been suspended following the invasion of Ukraine. In FY21 Russia
represented c.4% of Group revenue and contributed approximately
GBP20m to Group profit.
Strategic Performance Update
ASOS' strategy, as outlined at the CMD, is focused on
fashion-loving 20-somethings, ensuring it offers relevant product,
at relevant price points, with an onsite experience and delivery
methods that are tailored to their needs. With a model combining
exclusive own-brand product and a platform for partner brands, ASOS
is well-positioned to pursue the sizeable opportunity, represented
by a Total Addressable Market which the Company believes may be in
the region of GBP430bn in the UK, US, Europe, and core RoW
territories by 2030.
ASOS' strategy focuses on three key areas in the medium
term:
1. Leveraging its platform and capabilities through further
enhancements to the customer experience including the next stage of
personalisation, tailored category experiences, and the
amplification of ASOS' Premier offer; along with expansion of the
ASOS platform with the launch of its Partner Fulfilment programme,
targeting c.5% of GMV; underpinned by the next phase of ASOS'
Operational Excellence programme, focused on increasing operational
efficiencies as it implements a Lean programme across the
business.
2. Amplifying its winning offer by transforming its loved ASOS
brands into truly iconic brands, whilst improving speed to market
and leveraging the strength of its design, buying and merchandising
teams to incubate and create new brands, with the objective of
adding at least GBP1bn to annual own-brand sales; along with the
expansion of Face + Body and Sportswear which are both strategic
categories for future growth.
3. Driving international expansion by truly localising the offer
and investing in marketing to support an acceleration in
international growth rates, which includes doubling the size of the
combined US and Europe business.
In the first half, ASOS has made good progress in support of
these objectives, particularly in platform and capability
development which will serve to support the international expansion
in the medium term. Furthermore, ASOS has accelerated its
organisational re-design to improve the pace and delivery of the
Commercial function whilst elevating Data and Digital Product. Each
of these areas of progress against the strategy in H1 are expanded
on as follows:
1. Leveraging ASOS' Platform and Capabilities
ASOS successfully launched its Partner Fulfils pilot with adidas
and Reebok in the UK in November. The initial roll out focused on
offering additional availability of the existing ASOS range where
product had sold out in ASOS' own fulfilment centres. By the end of
February, Partner Fulfils accounted for c.8% of adidas and c.7% of
Reebok gross sales in the UK on ASOS.com. This has since been
expanded to include additional styles that are not currently
stocked in ASOS' fulfilment centres, adding width to ASOS' existing
range and providing increased choice to customers. This is expected
to expand to c.500 new styles in the UK by the end of the financial
year. ASOS is also on track to launch Partner Fulfils in select
countries within Europe by the end of FY22 in partnership with
adidas and Reebok. By the end of FY22, ASOS also expects to have
onboarded additional brands to its Partner Fulfils programme.
ASOS has made good progress on improving its customer experience
through the ongoing deployment of data science to personalise the
experience. ASOS has continued to iterate and test the in-house
personalised search results algorithm; as well as adding
personalised search results on the app. ASOS has completed its Data
Strategy in the first half and is currently mobilising the next
phase of the data evolution and investments. This involves
developing a larger data product team, improving data governance to
drive more value, enhancing the data architecture for future
scalability and agility, and growing the Company's data science
capability.
At the CMD in November, ASOS reiterated the importance of its
Premier offer in driving increased customer loyalty and improved
customer economics, with Premier customers in the UK shopping five
times as frequently as non-Premier customers. To deliver improved
Premier participation in non-UK markets, ASOS undertook a thorough
review and optimised pricing in key markets to better tailor the
offer locally. The Company also launched a Global Premier Party in
October, along with a Premier Day in February for the UK and
Ireland. These initiatives, combined with strong underlying growth,
have driven 24% growth in Premier subscribers across the Group, led
by 58% year-on-year growth in Premier subscribers in the US, with
RoW +45%, UK +23% and Europe +13%.
2. Amplifying ASOS' Winning Offer
ASOS has completed the reorganisation of its Commercial function
in support of its "create, curate, convert" strategy outlined at
the CMD through the creation of 12 new business units centred
around brands, geographies and emerging channels to create a more
customer-centric organisational structure and increase autonomy and
pace of decision making.
Topshop brands continued their growth trend delivering growth of
193% year-on-year as it grew its share of ASOS sales by 390bps over
the last year. Growth rates remain strong across the UK, US and
Germany, with all maintaining triple digit growth rates when
compared to Topshop brands sales on the ASOS platform last year.
Topshop visits growth remained strong in the run up to the
anniversary of the acquisition across all key markets, and
particularly in the UK. Topshop customers shopped with higher
frequency on average and were more likely to be Premier customers
and buy Face + Body products. This was also true among Topman
customers, who had a higher frequency and were more likely to place
more than 10 orders a year. Both Topshop and Topman customers were
highly valuable with a higher average customer value across key
markets than ASOS' group average.
3. Driving International Expansion
ASOS is well-positioned to accelerate international growth, with
strong foundations in place having built a winning customer offer
combining exclusive ASOS fashion brands with a curated edit of
nearly 900 partner brands, supported by investments in
infrastructure and technology, enabling ASOS to ensure an
attractive user experience combined with next-day-delivery that is
offered to more than 85% of our customers globally. ASOS' customer
proposition is particularly strong in the UK, and the focus is now
on replicating this in the US and Europe through the localisation
of both operations and customer experience, along with the growth
of a relevant assortment and an increase in marketing investment in
international territories to drive enhanced awareness.
The enhancement of local operations has progressed well with
Trade Heads appointed for US, France and Germany and Southern
Europe. In the second half of the year ASOS will focus on
localising the assortment, with a particular focus on the US where
ASOS Edition, ASOS Luxe and plus sizes resonate well. This is
further supported by an experiential presence that showcases our
product to US consumers, which ASOS has explored through its
partnership with US-based retailer Nordstrom.
In November, ASOS debuted its first drop with Nordstrom, with an
edit of ASOS Design, ASOS Edition and ASOS Luxe ranges available in
two physical Nordstrom stores - Bellevue and Century City - and on
Nordstrom.com, with ASOS Curve exclusively available online. In
February, this was extended further to two retail concepts at The
Grove in Los Angeles - Nordstrom I ASOS Glass Box and Nordstrom I
ASOS Pop-Up at The Grove featuring 120 options across Womenswear
and Menswear. Additionally, customers can also now collect their
ASOS.com orders at the Topshop by Nordstrom store at The Grove in
Los Angeles, as well as Nordstrom Bellevue and Nordstrom Century
City. An expanded assortment of ASOS product is now also available
for customers to shop on Nordstrom.com. In H2, there will be a
further ASOS I Nordstrom drop in 10 stores and on Nordstrom.com,
and Topshop and Topman will launch in Canada in six stores and on
Nordstrom.ca.
This year, ASOS has embarked on a broad reach marketing campaign
with the first phase rolled out on a "test and learn" basis
targeting 18 to 34-year-old females with the aim of building up
awareness and consideration. This was rolled out across multiple
platforms including TikTok, YouTube, Snapchat, Hulu and Roku for a
period of 90 days during peak across core test areas within the UK,
US and France. The initial test received both positive feedback and
constructive criticism which have been incorporated as learnings
and will be iterated on for the next round of testing. The scale-up
of the broad reach marketing campaign is currently expected to take
place towards the back end of FY22.
Organisational Realignment in Support of the Strategy:
In support of its strategy, ASOS has expanded its Executive
structure to help better align teams for the delivery of its
strategy. These changes in organisational design are key to driving
operational effectiveness across the business, improving change
management, and organising the Company around key business
divisions to deliver new growth opportunities at pace. At its core,
the strategy is focused on developing people and ensuring ASOS has
the talent and capability to execute its plans, enabling it to
execute more consistently at scale in tandem with an organisational
design that unlocks potential and sets ASOS up for its next phase
of growth. This programme is expected to last for at least the next
12 months, with costs expected to be GBP10m-GBP15m in H2 FY22.
Following the strategy refresh, ASOS has created a Strategy
Board to oversee the implementation of the strategy to drive the
business forward, consisting of the Chief Operating Officer &
Chief Financial Officer, Chief Commercial Officer, Chief Growth
Officer and Chief Technology Officer. The Strategy Board will be
supported by the expanded Executive Team, which includes:
o Two newly created roles leading the elevated focus on product
and data - a Chief Product Officer and Chief Data Officer
o The roles of Group Communications Director, Group Supply Chain
Director, and General Counsel & Company Secretary have been
elevated to the Executive Team
o The remaining roles on the Executive Team are the Chief People
Officer and Interim CFO
Following the successful strategy refresh, Patrik Silén, Chief
Strategy Officer, has left ASOS. In addition, Jo Butler, Chief
People Officer, and Robert Birge, Chief Growth Officer, have also
left the business.
Fashion With Integrity FY21 Results
-- ASOS today published its first annual update as part of its
FWI 2030 Programme, reporting progress in the period ending August
2021.
-- The Company has shown progress across all four goals underpinning its FWI 2030 Programme
-- The full report is available here .
-- Highlights include:
o Reduction in Scope 1 and 2 emissions / order of 59%
o 42% reduction in transport emissions / GBP profit
o 100% of all Tier 1 to 3 ASOS own-brand suppliers mapped
o Launch of a new package of policies to provide crucial support
to colleagues of all genders and circumstances going through
health-related life events
Outlook
Since ASOS provided guidance in October, the external
environment has become more challenging. The business, however, has
performed well, delivering results in line with guidance and
successfully absorbing significant incremental cost pressures,
predominantly from wage increases and freight inflation. There is
greater risk than normal as the full impact of recent inflationary
pressures and the potential impact on the discretionary spend on
our customers is yet to be felt. ASOS has acted decisively to
manage the factors within its control and the business enters the
second half of the year with a much-improved stock profile, and has
worked hard to mitigate the direct impact of inflation by locking
in the majority of the cost base for the remainder of the financial
year.
Despite the external challenges, sales growth is expected to
accelerate in the second half due to: the improved stock position;
the easing of the strong comparative growth rates that ASOS hurdled
in the first half of the year, particularly in the UK; the return
of event and holiday-led demand; increased marketing investment to
accelerate international sales; and an improved delivery
proposition as supply constraints ease. All of this is underpinned
by the strength of the ASOS brand and the breadth of our offer.
While there remains a proportion of the cost base that may be
susceptible to further inflation, second half profitability will be
supported by low to mid-single digit percentage price increases
across both ASOS and partner brands which were implemented in
H1.
Save for the removal of Russia's contribution to H2 following
the decision to suspend sales, as announced on 2 March, we are
maintaining guidance for the full year. The exclusion of Russia is
expected to reduce full year revenue growth by approximately 2%,
adjusted PBT by GBP14 million and a working capital outflow
associated with a rebalancing of stock. However, it is clear that
the outlook has become less certain, and much will depend on how
broader consumer discretionary spend evolves over the coming
months. This uncertainty introduces a greater degree of risk to our
performance than normal.
Notwithstanding the near-term uncertainty, ASOS looks to the
future with confidence, founded on significantly improved
operational grip and increasingly strong foundations which will
accelerate long-term growth as execution continues at pace on the
delivery of the strategy set out at the CMD in November 2021.
Mathew Dunn Patrick Kennedy
Chief Operating Officer & Chief Financial Senior Independent Director & Chair of
Officer the Audit Committee
Financial review
Overview
Six months to 28 February 2022
UK EU US RoW(1) Total
GBPm GBPm GBPm GBPm GBPm
Retail sales(2) 867.2 564.1 226.0 270.1 1,927.4
Income from other services(3) 28.3 13.3 26.7 8.4 76.7
Total revenue 895.5 577.4 252.7 278.5 2,004.1
Cost of sales (1,140.9)
----------
Gross profit 863.2
Distribution expenses (255.6)
Administrative expenses (612.0)
----------
Operating loss (4.4)
Net finance expense (11.4)
----------
Loss before tax (15.8)
----------
Adjusted Performance Measures(4)
Operating loss (4.4)
Adjusting items(5) 30.6
Adjusted operating profit 26.2
Net finance expense (11.4)
Adjusted profit before tax 14.8
---------------------------------- ------ ------ ------ ------- ----------
1 Rest of World
2 Retail sales are internet sales recorded net of an appropriate
deduction for actual and expected returns, relevant vouchers and
sales taxes
3 Income from other services comprises delivery receipts
payments, wholesale sales and marketing services
4 The adjusted performance measures used by ASOS are defined and
explained on page 33
5 Adjusting items for the six months to 28 February 2022 are
shown on page 13. Further detail on these items is on page 33
Six months Six months Change
to 28 February to 28 February
2022 2021
----------------------------- ---------------- ---------------- -------
Active customers(1) (m) 26.7 24.9 7%
Average basket value(2) GBP38.47 GBP41.09 (6%)
Average order frequency(3) 3.70 3.45 7%
Total shipped orders (m) 50.1 46.7 7%
Total visits(4) (m) 1,587.2 1,581.4 0%
Conversion(5) 3.2% 3.0% 20bps
----------------------------- ---------------- ---------------- -------
(1) Defined as having shopped in the last 12 months as at 28
February 2022, (2) Average basket value is defined as net retail
sales divided by shipped orders. This was changed at the end of
FY21 from the previous definition, which calculated the metric
based on gross sales (3) Calculated as last 12 months' total
shipped orders divided by active customers, (4) Restated visits,
previously reported number 1,585.1, (5) Calculated as total orders
divided by total visits
Total sales grew 4% constant currency (CCY), in line with
guidance for H1, against a backdrop of expected supply chain
constraints, which impacted product availability and newness across
all markets, along with demand and returns rate volatility related
to the emergence of the Omicron variant. Overall growth was largely
driven by performance in the UK and US markets, which grew 8% and
11% CCY respectively, supported by strong peak performance,
successful customer engagement through key trading events, the
strengthening of ASOS' Premier offer, and the continued strength of
the Topshop brands as the Company marked the one year anniversary
of acquisition of these iconic brands. EU growth was 1% CCY, as
demand was particularly impacted by uncertainty in the market
following an increase in COVID-19 cases and associated restrictions
in the period. RoW was down 10% CCY as ASOS' delivery proposition
continued to be impacted by the reduction in flights servicing key
territories in the region.
Active customers grew in the first half by 0.3m to reach 26.7m,
up 7% year-on-year and 1% since year-end, with Premier customers
growing by 24% year-on-year. H1 last year saw strong acquisition
and reactivation of customers who were driven online by the closure
of physical retail stores, conditions which have not been as
widespread or stringent in the current year. This has led to a
rebalancing of demand which, along with lower levels of stock
availability, has impacted customer acquisition in H1. Taken
together, these factors have contributed to slower growth in active
customers, a trend expected to improve in H2 as comparatives ease
and stock availability returns to normal levels. Focusing on
Premier customers, the traction seen from the enhanced offering in
key markets has been pleasing, with growth of 23% in the UK and 58%
in the US versus last year, and 10% and 17% respectively versus
year-end.
Reported loss before tax and adjusted profit before tax reduced
by 115% and 87% to (GBP15.8m) and GBP14.8m respectively. Adjusting
items for the half totalled GBP30.6m comprised of: (i) GBP7.9m
costs incurred in relation to accelerating the ASOS strategy, (ii)
GBP5.5m relating to ASOS' transition to a Main Market listing,
(iii) GBP18.3m for a one-off, non-cash impairment charge relating
to the right-of-use asset and associated fixtures and fittings at
ASOS' Leavesden office because of the decision to vacate and sublet
unused space to third parties, (iv) (GBP6.4m) relating to the
release of a provision for employee and other costs relating to the
Topshop acquisition, (v) GBP5.3m relating to the amortisation of
acquired intangible assets. Further detail on each of these items
can be found on page 33.
The reduction in profitability year-on-year reflects the unwind
of the COVID-19 tailwind of GBP48.5m referenced at H1 last year as
the product mix and returns rates have normalised. Additional
factors include a reduction in gross margin of 190bps, due to
elevated freight and duty costs and higher markdown activity to
clear slow-moving '21 Spring / Summer stock; and an increase in
operating costs, reflecting planned increases in marketing
investment and inflationary cost pressures, particularly in
warehouse labour. These elevated costs have been largely offset by
strong cost efficiency initiatives across gross profit, supply
chain, marketing, and other parts of the fixed cost base.
ABV was down year-on-year, driven by higher markdown and
promotion activity related to the clearance of slow-moving '21
Spring / Summer stock, and the higher year-on-year returns
rate.
UK performance
UK KPIs Six months
to 28 February
2022
Total sales +8%
Visits +8%
Shipped orders +13%
Conversion +20bps
ABV -4%
Active customers 8.8m (+13%)
ASOS saw strong performance in the UK during the first half, as
sales, visits, and orders continued to grow despite the exceptional
nature of the comparator period, where physical retail stores and
hospitality venues were closed due to lockdowns. The peak trading
months of November and December saw customers engage well with
ASOS' offer, whilst Face + Body and Sportswear continued to perform
well. Since acquisition the Topshop brands have been strong
performers in the UK, sustaining the triple digit sales growth seen
in H2 FY21 throughout H1 FY22.
Active customers grew to 8.8m, +13% versus last year and +4%
since year-end, with Premier customers growing to just under 2m,
+23% versus last year and +10% since year-end, reflecting the
ongoing resonance of the offer and the success of the Premier Days
held in October and February.
Visits growth was 8%, while conversion increased by 20bps. ABV
stepped back 4% as the level of markdown and promotion increased,
driven by the clearance of slow-moving '21 Spring / Summer stock
and the investment made over peak trading to capture the demand in
the market.
EU performance
EU KPIs Six months
to 28 February
2022
Total sales +1% CCY
Visits Flat
Shipped orders +5%
Conversion +10bps
ABV -7%
ABV (CCY)(1) -3%
Active customers 10.5m (+6%)
(1) ABV (CCY) is calculated as constant currency retail sales /
shipped orders
EU sales growth was +1% CCY, reflecting the impact of the fourth
COVID-19 wave on demand and returns rates.
Within the EU, Germany grew mid-single digits as visits remained
strong and customers engaged well with promotions. The period also
ended positively following the removal of restrictions. In
contrast, the French market was more challenging as customers
returned to the reopened High Street leading to lower visits and
weaker sales. This was more pronounced in P1, where sales declined
year-on-year, however the decline in sales slowed in P2 as a more
localised approach to promotion during the Soldes period drove
improved performance.
Active customers were up 6% versus last year, as the Company
cycled a strong period of growth in the comparative period.
However, there was evidence to suggest that changes made to the
Premier proposition across key EU territories proved compelling for
customers, with subscriptions increasing year-on-year in Germany
(+41%) and Ireland (+91%) in particular. Growth of 11% in
Sportswear was also pleasing, and, along with Premier, highlights
that customers are becoming more engaged with the full ASOS offer.
Growth in the Topshop brands remained strong in Germany, more than
doubling versus the equivalent period last year.
ABV stepped back 3% CCY (reported -7%) on the year which, as
with the UK, reflected higher markdown and promotional activity.
Visits were flat, but shipped orders grew at 5% as conversion
improved year-on-year.
US performance
US KPIs Six months
to 28 February
2022
Total sales +11% CCY
Visits -7%
Shipped orders Flat
Conversion +20bps
ABV Flat
ABV (CCY) +2%
Active customers 3.5m (+6%)
(1) ABV (CCY) is calculated as constant currency retail sales /
shipped orders
US sales grew by 11% CCY. From a retail sales perspective,
performance was supported by strong promotion mechanics and
underlying demand and was particularly pleasing given the port
congestion and supply chain disruption which inhibited ASOS'
ability to fully service the available demand. In addition to this,
February saw strong customer engagement, driven by successful
promotions around the Superbowl, Single's Day, and Presidents' Day,
as well as stronger visits and conversion. In addition, ASOS has
continued to expand its wholesale partnership with Nordstrom, which
now includes products from ASOS Design sold on Nordstrom.com in
addition to Topshop and Topman.
In the year since the acquisition of the Topshop brands,
customers in the US have responded positively to the increased
range on offer, reflecting the resonance of the brand in market.
Total sales have grown triple digit versus the equivalent period
last year, with customer metrics reinforcing the appeal the brands
have for ASOS' core customer.
Active customers were up 6% versus last year and broadly flat
versus year-end, whilst the enhanced Premier proposition introduced
at the start of the financial year drove a 58% increase in Premier
customer numbers versus last half year, and a 17% increase since
the start of the current year. Whilst it is still early days,
trends show that more US customers are engaging with more parts of
the ASOS offer, including Premier and additional categories such as
Face + Body and Sportswear. Whilst this drives benefits in customer
engagement, with frequency up 2% versus last year, the growth of
Premier has also driven growth in delivery income.
RoW performance
RoW KPIs Six months
to 28 February
2022
Total sales -10% CCY
Visits -6%
Shipped orders -8%
Conversion -10bps
ABV -6%
ABV (CCY) -2%
Active customers 3.9m (Flat)
(1) ABV (CCY) is calculated as constant currency retail sales /
shipped orders
RoW sales were back 10% CCY versus last year, as the delivery
proposition to key RoW markets remained relatively uncompetitive.
Visits have been weak across the period, particularly in Australia
as the country exited lockdown in October and customers returned to
the High Street, whilst performance was also constrained by low
product availability across all RoW markets. Consequently, shipped
orders fell at a faster rate than visits, and ABV was suppressed by
higher markdown.
RoW active customers have remained flat versus last half year
and year-end, with new customer growth and reactivations slowing
down. Growth in the customer base was also constrained by the
extended delivery proposition and lower availability.
As announced in the RNS on 2 March 2022, sales in Russia have
been suspended following the invasion of Ukraine. In FY21 Russia
represented c.4% of Group revenue and contributed approximately
GBP20m to Group profit and for FY22, the suspension of sales is
expected to reduce Group revenue by 2% and Group profit by GBP14m,
with the impact on profit reflecting that ASOS' profits are
predominantly earned in H2 each year.
Gross margin
Gross margin reduced by 190bps in the period driven by
heightened clearance activity relating to slow-moving '21 Spring /
Summer stock and elevated freight costs. This was an improvement
from P1, which saw gross margin step back 400bps versus last year,
as initiatives to improve buying margin were actioned, and low to
mid-single digit price increases were implemented.
Operating expenses
Six months Six months
to 28 February to 28 February % of
GBPm 2022 % of sales 2021 sales Change
Distribution costs (255.6) 12.8% (247.9) 12.5% 30bps
Warehousing (207.2) 10.3% (171.9) 8.7% 160bps
Marketing (119.7) 6.0% (108.9) 5.5% 50bps
Other operating costs (186.1) 9.3% (184.7) 9.3% -
Depreciation and
amortisation (68.4) 3.4% (60.4) 3.1% 30bps
Adjusting items(1) (30.6) 1.5% (6.5) 0.4% 110bps
----------------------- ---------------- ----------- ---------------- ------- -------
Total operating costs (867.6) 43.3% (780.3) 39.5% 380bps
----------------------- ---------------- ----------- ---------------- ------- -------
1 Further detail on adjusting items can be found on page 13 and
page 33.
Operating expenses increased 11% to GBP867.6m and increased by
380bps as a percentage of sales, reflecting inflationary pressure,
growth investments, and the one-off costs mentioned above.
Distribution costs have increased by 30bps year-on-year due to
the continued normalisation of the returns rate, with the impact
partly offset by successful contract negotiations with carriers in
key markets and carrier mix, as we were able to re-allocate volume
to less expensive suppliers.
Warehousing costs have increased as expected due to high rates
of labour rate inflation, which ASOS has met to maintain
recruitment levels. This is expected to be a structural change
within the market. Warehouse costs have also been impacted by the
launch of Lichfield as a manual facility which has, as expected,
had a further drag on profitability. This is because units
previously despatched from Barnsley, which is highly automated,
have been fulfilled from Lichfield instead at a lower efficiency
and consequently a higher cost per unit. This is a short-term cost
drag, expected to reverse once automation is completed in the
second half of FY23. Across the more established sites, we continue
to drive improvements in efficiency - particularly in Eurohub -
whilst the closure of the returns site at Swiebodzin and
reallocation of volume to the other returns sites in Europe, has
improved efficiency and reduced fixed costs within the EU returns
network. The Lean programme has also supported supply chain in
identifying further areas for efficiency, supporting operational
excellence initiatives.
Marketing costs increased by 50bps as a percentage of sales as
expected, as investment in broad reach marketing began. The first
phase utilised the test and learn approach and spend was increased
across the ASOS social platforms to drive engagement.
Other operating costs, excluding adjusting items, are flat
year-on-year due to increased leverage of the fixed cost base of
the business, as well as benefits derived from operational
excellence initiatives across procurement and technology.
Depreciation and amortisation costs as a percentage of sales are
up 30bps year-on-year, excluding the amortisation on acquired
intangibles, driven by depreciation relating to the Truly Global
Retail system, which went live in March 2021, and Lichfield, which
went live in August 2021.
Interest
Net interest costs were GBP11.4m in the period, an increase of
GBP8.1m year-on-year mainly driven by interest costs incurred on
the convertible bond issued in April 2021.
Taxation
The reported effective tax rate is 14.6% based on the reported
loss before tax of GBP15.8m. The H1 reported tax rate is different
from the full year forecast rate of 22.0% due to a greater portion
of full year profits being earned in H2 in the current year,
meaning the impact of the adjustments have a larger impact on the
effective tax rate in H1 FY22 than they did in the prior years. The
reported tax rate is below the prior year comparative of 23.1%.
Going forward, ASOS expects the effective tax rate to continue
to be higher than the prevailing rate of UK corporation tax due to
permanently disallowable items and the impact of the new tax rate
on deferred tax balances arising in the year.
Earnings per share
Both basic and diluted loss per share was 13.5p, falling by 117%
versus last year (H121: basic and diluted earnings per share of
82.1p and 81.9p). This was driven by a reported loss before tax of
GBP15.8m, down from profit before tax of GBP106.4m last year. The
potentially convertible shares related to both the convertible bond
and ASOS' employee share schemes have been excluded from the
calculation of diluted loss per share as they are anti-dilutive for
the six months ended 28 February 2022.
Cash flow
There was a GBP262.1m decrease in net cash (cash and cash
equivalents less borrowings) in the period, driven by a working
capital outflow of GBP243.2m reflecting ASOS' typical working
capital cycle but more exaggerated than last year due to the
accelerated stock build for '22 Spring / Summer in response to
longer lead times. Capital expenditure of GBP86.5m is split across
supply chain, as the automation programmes continue in Lichfield
and Atlanta, and technology, as investments continue to be made
into key parts of ASOS' infrastructure.
Consolidated UNAUDITED Statement of Total Comprehensive
Income
Interim Results for the six months to 28 February 2022
Six months Six months
to to
28 February 28 February
2022 2021
(unaudited) (unaudited)
GBPm GBPm
Revenue 2,004.1 1,975.9
Cost of sales (1,140.9) (1,085.9)
------------------------------------------- -------------- --------------
Gross profit 863.2 890.0
Distribution expenses (255.6) (247.9)
Administrative expenses (612.0) (532.4)
Operating (loss)/profit (4.4) 109.7
Finance income 0.1 0.1
Finance expense (11.5) (3.4)
(Loss)/profit before tax (15.8) 106.4
Income tax credit/(expense) 2.3 (24.6)
------------------------------------------- -------------- --------------
(Loss)/profit for the period (13.5) 81.8
------------------------------------------- -------------- --------------
(Loss)/profit for the period attributable
to owners of the parent company (13.5) 81.8
------------------------------------------- -------------- --------------
Alternative Performance Measures
(note 12)
Operating (loss)/profit (4.4) 109.7
Adjusting items:
Strategic acceleration costs ('ASOS 7.9 -
Reimagined')
Main market transition costs 5.5 -
Impairment of Leavesden assets 18.3 -
Employee and other liabilities relating (6.4) -
to Topshop acquisition
Amortisation of acquired intangible
assets 5.3 0.6
One-off acquisition and integration
costs - 5.9
Adjusted EBIT 26.2 116.2
Net finance expenses (11.4) (3.3)
Adjusted profit before tax 14.8 112.9
------------------------------------------- -------------- --------------
Consolidated UNAUDITED Statement of Total Comprehensive Income
(continued)
Interim Results for the six months to 28 February 2022
Six months Six months
to to
28 February 28 February
2022 2021
(unaudited) (unaudited)
GBPm GBPm
------------------------------------ -------------- --------------
(Loss)/profit for the period (13.5) 81.8
------------------------------------ -------------- --------------
Net translation movements offset
in reserves 0.1 (0.1)
Net fair value gains on derivative
financial instruments 31.0 31.5
Income tax expense relating to
these items (5.5) (6.0)
------------------------------------ -------------- --------------
Other comprehensive income for
the period(1) 25.6 25.4
------------------------------------ -------------- --------------
Total comprehensive income for
the period attributable to owners
of the parent company 12.1 107.2
------------------------------------ -------------- --------------
Earnings per share for the period
attributable to owners of the
parent company (note 5)
Basic (13.5p) 82.1p
Diluted (13.5p) 81.9p
------------------------------------ -------------- --------------
(1) All items of other comprehensive income will subsequently be
reclassified to profit or loss
Employee Equity
Benefit portion
Called Trust of
up share Share Retained reserve Hedging convertible Translation Total
capital premium earnings(1) (EBT) (2) reserve bond reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2021 3.5 245.7 711.9 2.1 14.3 58.9 (2.4) 1,034.0
Loss for the
period - - (13.5) - - - - (13.5)
Other
comprehensive
income for
the
period - - - - 25.5 - 0.1 25.6
---------- ----------- ------------- ------------ --------- ------------ ------------ --------
Total
comprehensive
(loss)/income
for the
period - - (13.5) - 25.5 - 0.1 12.1
---------- ----------- ------------- ------------ --------- ------------ ------------ --------
Share-based
payments
charge - - 1.9 - - - - 1.9
Tax relating
to share
option
scheme - - (0.8) - - - - (0.8)
---------- ----------- ------------- ------------ --------- ------------ ------------ --------
Balance as at
28 February
2022 3.5 245.7 699.5 2.1 39.8 58.9 (2.3) 1,047.2
---------- ----------- ------------- ------------ --------- ------------ ------------ --------
Consolidated UNAUDITED Statement of Changes in EquitY
Interim Results for the six months to 28 February 2022
Employee Equity
Called Benefit portion
up Trust of
share Share Retained reserve Hedging convertible Translation Total
capital premium earnings(1) (EBT)(2) reserve bond reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2020 3.5 245.7 577.0 2.0 (15.8) - (2.1) 810.3
Profit for the
period - - 81.8 - - - - 81.8
Other
comprehensive
income/(loss)
for the
period - - - - 25.5 - (0.1) 25.4
--------- ----------- ------------- ------------- --------- ------------ ------------ --------
Total
comprehensive
income/(loss)
for the
period - - 81.8 - 25.5 - (0.1) 107.2
--------- ----------- ------------- ------------- --------- ------------ ------------ --------
Net cash
received
on exercise
of
shares from
EBT(2) - - - 0.2 - - - 0.2
Share-based
payments
charge - - 5.0 - - - - 5.0
Tax relating
to
share option
scheme - - 1.4 - - - - 1.4
--------- ----------- ------------- ------------- --------- ------------ ------------ --------
Balance as at
28 February
2021 3.5 245.7 665.2 2.2 9.7 - (2.2) 924.1
--------- ----------- ------------- ------------- --------- ------------ ------------ --------
(1) Retained earnings includes share-based payments reserves
(2) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Changes in EquitY
(CONTINUED)
Employee Equity
Called Benefit portion
up Trust of
share Share Retained reserve Hedging convertible Translation Total
capital premium earnings(1) (EBT)(2) reserve bond reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2020 3.5 245.7 577.0 2.0 (15.8) - (2.1) 810.3
Profit for the
year - - 128.4 - - - - 128.4
Other
comprehensive
loss for the
year - - - - 30.1 - (0.3) 29.8
--------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Total
comprehensive
income/(loss)
for the year - - 128.4 - 30.1 - (0.3) 158.2
Issue of
convertible
bond - - - - - 58.9 - 58.9
Recognition of
gross
obligation
to purchase
own
shares - - (2.8) - - - - (2.8)
Net cash
received
on exercise
of
shares from
EBT(2) - - - 0.1 - - - 0.1
Share-based
payments
charge - - 9.4 - - - - 9.4
Tax relating
to
share option
scheme - - (0.1) - - - - (0.1)
--------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Balance as at
31 August
2021 3.5 245.7 711.9 2.1 14.3 58.9 (2.4) 1,034.0
--------- ----------- ------------ ------------ --------- ------------ ------------ ----------
(1) Retained earnings includes share-based payments reserves
(2) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Financial PositioN
Interim Results for the six months to 28 February 2022
At At At
28 February 28 February 31 August
2022 2021 2021 (audited)
(unaudited) (unaudited)
GBPm GBPm GBPm
Non-current assets
Goodwill(1) 35.2 23.4 33.1
Other intangible assets 629.1 613.6 619.1
Property, plant and equipment 679.4 628.6 659.2
Derivative financial assets 14.7 14.5 13.4
1,358.4 1,280.1 1,324.8
------------- ------------- -----------------
Current assets
Inventories(1) 986.4 694.6 807.1
Trade and other receivables 87.4 86.8 57.7
Derivative financial assets 40.8 27.9 23.5
Cash and cash equivalents 406.7 92.0 662.7
Current tax asset 8.7 - 8.7
-------------
1,530.0 901.3 1,559.7
------------- ------------- -----------------
Current liabilities
Trade and other payables (927.0) (823.3) (956.1)
Borrowings (1.4) - (3.8)
Lease liabilities (24.9) (20.0) (23.9)
Derivative financial liabilities (6.5) (24.1) (14.2)
Current tax liability - (9.0) -
(959.8) (876.4) (998.0)
------------- ------------- -----------------
Net current assets 570.2 24.9 561.7
-------------
Non-current liabilities
Lease liabilities (320.2) (309.6) (305.0)
Deferred tax liability (45.6) (22.0) (41.3)
Provisions (45.9) (38.0) (43.2)
Derivative financial liabilities (1.8) (11.3) (3.6)
Borrowings (467.9) - (459.4)
-------------
(881.4) (380.9) (852.5)
------------- ------------- -----------------
Net assets 1,047.2 924.1 1,034.0
------------- ------------- -----------------
Equity attributable to owners
of the parent
Called up share capital 3.5 3.5 3.5
Share premium 245.7 245.7 245.7
Employee Benefit Trust reserve(2) 2.1 2.2 2.1
Hedging reserve 39.8 9.7 14.3
Translation reserve (2.3) (2.2) (2.4)
Equity portion of convertible
bond 58.9 - 58.9
Retained earnings 699.5 665.2 711.9
------------- ------------- -----------------
Total equity 1,047.2 924.1 1,034.0
------------- ------------- -----------------
(1) During the period these balances have been adjusted as a
result of a change to the provisional acquisition date fair values
during the remeasurement period. Please see note 9 for further
details
(2) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Cash Flows
Interim Results for the six months to 28 February 2022
Six months Six months
to to
28 February 28 February
2022 2021
(unaudited) (unaudited)
GBPm GBPm
Operating (loss)/profit (4.4) 109.7
------------- -------------
Adjusted for:
Depreciation of property, plant
and equipment 30.0 31.0
Amortisation of other intangible
assets 43.7 30.0
Impairment of assets 18.9 0.1
Increase in inventories (181.3) (159.4)
(Increase)/decrease in trade
and other receivables (30.2) 0.7
(Decrease)/increase in trade
and other payables (31.7) 25.1
Share based payments charge 1.5 4.2
Other non-cash items 0.3 (1.6)
Income tax refunded/(paid) 2.0 (15.1)
------------- -------------
Net cash (outflow)/inflow from
operating activities (151.2) 24.7
Investing activities
Payments to acquire intangible
assets (53.4) (50.9)
Payments to acquire property,
plant and equipment (33.1) (9.7)
Payments to acquire assets in
a business combination - (266.0)
Finance income received 0.1 0.1
Net cash used in investing activities (86.4) (326.5)
Financing activities
Net cash inflow relating to EBT(1) - 0.2
Principal portion of lease liabilities (13.4) (11.1)
Finance expense paid (5.5) (2.8)
Net cash utilised in financing
activities (18.9) (13.7)
Net decrease in cash and cash
equivalents (256.5) (315.5)
------------- -------------
Opening cash and cash equivalents 662.7 407.5
Net decrease in cash and cash
equivalents (256.5) (315.5)
Effect of exchange rates on cash 0.5 -
and cash equivalents
------------- -------------
Closing cash and cash equivalents 406.7 92.0
------------- -------------
(1) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Cash Flows (Continued)
Interim Results for the six months to 28 February 2022
Six months Six months
to to
28 February 28 February
2022 2021
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------- ------------- -------------
Adjusted Performance Measures
(note 12)
Net cash (outflow)/inflow from
operating activities (151.2) 24.7
Adjusted for:
Payments to acquire intangible
assets (53.4) (50.9)
Payments to acquire property,
plant and equipment (33.1) (9.7)
Principal portion of lease liabilities (13.4) (11.1)
Finance expense paid (5.5) (2.8)
Free cash flow (256.6) (49.8)
Impact of adjusting items 7.8 -
Adjusted free cash flow (248.8) (49.8)
---------------------------------------- ------------- -------------
Notes to the financial information
Interim Results for the six months to 28 February 2022
1. Preparation of the consolidated financial information
a) General information
ASOS Plc ('the Company') and its subsidiaries (together, 'the
Group') is a global fashion retailer. The Group sells products
across the world and has websites targeting the UK, US, Australia,
France, Germany, Spain, Italy, the Netherlands, Russia, Sweden,
Denmark and Poland. The Company is a public limited company which
is listed on the London Stock Exchange and is incorporated and
domiciled in the UK. The address of its registered office is
Greater London House, Hampstead Road, London, NW1 7FB.
The interim financial statements have been reviewed, not
audited, and were approved by the Board of Directors on 11 April
2022.
b) Basis of preparation
The interim financial statements for the six months to 28
February 2022 have been prepared in accordance with the UK-adopted
IAS 34, "Interim Financial Reporting" and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority. The interim financial statements transitioned to
UK-adopted International Accounting Standards for financial periods
beginning after 1 January 2021. This change constitutes a change in
accounting framework. However, there is no impact on recognition,
measurement or disclosure in the period reported as a result of the
change in framework. The interim financial statements should be
read in conjunction with the Group's Annual Report and Accounts for
the year to 31 August 2021, which was prepared in accordance with
IFRSs as issued and adopted by the IASB.
The interim financial statements have been reviewed, not
audited, and do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. The Annual Report
and Accounts for the year to 31 August 2021 have been filed with
the Registrar of Companies. The auditors' report on those accounts
was unqualified, did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying the report and did not contain statements under section
498 of the Companies Act 2006.
The Group's business activities, together with the factors that
are likely to affect its future developments, performance and
position, are set out on pages 5 to 11. The Financial Review on
pages 12 to 17 describes the Group's financial position and cash
flows.
Going concern
The Directors have reviewed current performance and cash flow
forecasts, and are satisfied that the Group's forecasts and
projections, taking account of potential changes in trading
performance, show that the Group will be able to operate within the
level of its available facilities for the foreseeable future. The
Directors have therefore continued to adopt the going concern basis
in preparing the Group's financial statements.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge,
these condensed interim financial statements have been prepared in
accordance with UK-adopted IAS 34, "Interim Financial Reporting"
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
1. Preparation of the consolidated financial information
(continued)
-- An indication of important events that have occurred during the first six months and their impact on the
condensed set of financial statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- Material related-party transactions in the first six months and any material changes in the related-party
transactions described in the last annual report.
Accounting policies
The interim financial statements have been prepared in
accordance with the accounting policies set out in the Group's
Annual Report and Accounts for the year to 31 August 2021.
Accounting estimates
During the period, in accordance with IAS 16, "Property, Plant
and Equipment and IAS 38, "Intangible Assets", management have
reviewed the useful economic life ("UEL") of all asset groups.
Management have reviewed all asset categories and, where
appropriate, increased or decreased the UEL to align with the
expected life of the asset. This change includes reassessment of
UELs on the automation assets within ASOS' fulfilment centres, the
systems which support these assets as well as the systems directly
connected with the Total Global Retail programme ("TGR").
The impact of this reassessment, effective from 1 September
2021, is a decrease in the amortisation and depreciation charge of
GBP5.6m in the six-month period ending 28 February 2022.
The updated useful lives are as follows:
-- Right of use assets: depreciated over remaining lease term which
is typically between seven and twenty-five years
-- Fixtures, fittings, plant and machinery: depreciated over five
to fifteen years or over the remaining lease term where applicable
-- Computer equipment: depreciated over three to five years according
to the estimated life of the asset or over the remaining lease
term where applicable
-- Capitalised software development cost: amortised over the assets'
expected economic lives, normally between five and seven years,
except for major technical infrastructure projects which have
an expected economic life of between ten and fifteen years
Significant accounting judgements and key sources of estimation
uncertainty
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and reported amounts
of assets and liabilities, income and expense. Actual results might
differ from these estimates.
In preparing these condensed interim financial statements the
significant judgements made by management and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements for the year ended 31 August 2021
as outlined in the Group's Annual Report and Accounts on page
99.
2. Principal risks and uncertainties
The Board have concluded, following a reassessment of emerging
risks in relation to the Russia/Ukraine conflict, that the
principal risks and uncertainties which could impact the Group over
the remaining six months of the financial year to 31 August 2022
are unchanged from those set out in the Annual Report and Accounts
for the year to 31 August 2021. The applicable risks are summarised
as follows:
-- Operational risks, including:
- Transformation projects are delayed or fail to deliver;
- Supply chain disruption;
- Understanding local market context, globally;
- Sustainability and climate change;
- Failure to comply with legislation or regulation; and
- Ethical trade or sourcing issues in our supply chain
-- Market risks, including:
- Geopolitical uncertainty including the Russia/Ukraine conflict;
- Shift in e-commerce market dynamics;
- Cyber threat and data security;
- Key third party supplier or service provider failure and business continuity; and
- Foreign exchange movement
These are set out in detail on pages 36 to 43 of the Group's
Annual Report and Accounts for the year to 31 August 2021, a copy
of which is available on the Group's website, www.asosplc.com .
Information on financial risk management is also detailed on pages
111 to 114 of the Annual Report.
3. Segmental analysis
Per IFRS 8 the Chief Operating Decision Maker has been
determined to be the Executive Committee which receives information
on the revenue and associated metrics of the Group in key
geographical territories. Management monitors and makes decisions
considering the entire Group. The Group has reviewed its assessment
of reportable segments under IFRS 8, "Operating Segments" and
concluded that the Group continues to have one reportable
segment.
3. Segmental analysis (continued)
The following sets out the Group's revenue in the key geographic
markets in which customers are located:
Six months to 28 February 2022 (unaudited)
UK EU US RoW(1) Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 867.2 564.1 226.0 270.1 1,927.4
Income from other
services(2) 28.3 13.3 26.7 8.4 76.7
Total revenue 895.5 577.4 252.7 278.5 2,004.1
Cost of sales (1,140.9)
----------
Gross profit 863.2
Distribution expenses (255.6)
Administrative expenses (612.0)
----------
Operating loss (4.4)
Net finance expense (11.4)
----------
Loss before tax (15.8)
----------
1 Rest of World
2 Income from other services comprises delivery receipt
payments, marketing services, commission on partner-fulfilled sales
and revenue from wholesale sales.
Six months to 28 February 2021 (unaudited)
UK EU US RoW(1) Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 800.4 580.1 225.7 313.7 1,919.9
Income from other
services(2) 25.4 14.3 7.2 9.1 56.0
Total revenue 825.8 594.4 232.9 322.8 1,975.9
Cost of sales (1,085.9)
------------
Gross profit 890.0
Distribution expenses (247.9)
Administrative expenses (532.4)
------------
Operating profit 109.7
Net finance expense (3.3)
------------
Profit before tax 106.4
------------
1 Rest of World
2 Income from other services comprises delivery receipt payments
and marketing services.
Due to the nature of its activities, the Group is not reliant on
any individual major customers.
The total amount of non-current assets excluding goodwill and
derivatives located in the UK is GBP986.0m (31 August 2021:
GBP994.1m), EU (Germany): GBP188.3m (31 August 2021: GBP193.6m),
US: GBP134.2m (31 August 2021: GBP90.6m) and RoW: GBPnil (31 August
2021: GBPnil). The individual countries within the EU and RoW do
not meet the definition of material per IFRS 8 for a reportable
segment and therefore have been assessed as not material for
separate reporting in this disclosure.
4. Taxation
Income tax credit/(expense) is recognised on management's
estimate of the weighted average effective annual income tax rates
for corporate and deferred taxes expected for the full financial
year excluding non-underlying costs, prior year adjustments, share
based payments and derivatives, which are recognised on an actuals
basis. The estimated average annual tax rate used for the six
months to 28 February 2022 is 22.0% compared to 23.1% for the six
months to 28 February 2021.
The reported effective tax rate is 14.6% based on the reported
loss before tax of GBP15.8m. The H1 reported tax rate is different
from the full year forecast rate due to a greater portion of full
year profits being earned in H2 in the current year, meaning the
adjustments have a larger impact on the effective tax rate in H1
FY22 than they did in the prior years. The reported tax rate is
below the prior year comparative of 23.1% due to the period
reporting a loss before tax.
Going forward, ASOS expects the effective tax rate to continue
to be higher than the prevailing rate of UK corporation tax due to
permanently disallowable items and the impact of the new tax rate
on deferred tax balances arising in the year
5. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period. Own
shares held by the Employee Benefit Trust and Link Trust are
eliminated from the weighted average number of ordinary shares.
Diluted earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period,
adjusted for the effects of potentially dilutive share options.
Six months Six months
to to
28 February 28 February
2022 2021 (unaudited)
(unaudited)
No. of shares No. of shares
Weighted average share capital
Weighted average shares in issue for
basic earnings per share 99,675,829 99,574,955
Weighted average effect of dilutive
options - 303,613
Weighted average shares in issue for
diluted earnings per share 99,675,829 99,878,568
-------------- -------------------
Earnings (GBPm)
Earnings attributable to owners of
the parent (13.5) 81.8
Diluted earnings attributable to owners
of the parent for diluted earnings
per share (13.5) 81.8
---------------- ------
Basic earnings per share (13.5p) 82.1p
Diluted earnings per share (13.5p) 81.9p
---------------- ------
The Group has issued a convertible bond which is potentially
convertible into 6,277,464 shares. These are not included in the
calculation of diluted earnings per share because they are
anti-dilutive for the six months ended 28 February 2022. The
convertible bond could potentially dilute basic earnings per share
in the future.
5. Earnings per share (continued)
There are 81,186 options relating to various employee share
schemes which have not been included in the calculation of diluted
earnings per share because they are anti-dilutive for the six
months ended 28 February 2022. These options could potentially
dilute basic earnings per share in the future.
6. Capital expenditure and commitments
During the period, the Group capitalised intangible assets of
GBP53.5m (28 February 2021: GBP296.9m) and property, plant and
equipment of GBP68.0m (28 February 2021: GBP44.4m) of which
GBP32.9m relates to an increase in the Atlanta right of use asset
as a result of a reassessment of the probability of exercising
extension clauses. At the period end capital commitments
contracted, but not provided for by the Group, amounted to
GBP166.4m (28 February 2021: GBP49.1m).
A one-off, non-cash, impairment charge of GBP18.3m relating to
the right-of-use assets and associated fixtures and fittings at
part of the ASOS' Leavesden office was recognised in the period.
This is required under IAS 36 as a result of the decision to vacate
and sublet part of the building to third parties.
7. Contingent liabilities
From time to time, the Group is subject to various legal
proceedings and claims that arise in the ordinary course of
business, which due to the fast-growing nature of the Group and its
ecommerce base, may concern the Group's brand and trading name or
its product designs. All such cases brought against the Group are
robustly defended and a liability is recorded only when it is
probable that the case will result in a future economic outflow
which can be reliably measured.
At 28 February 2022, the Group had contingent liabilities of
GBPnil (31 August 2021: GBP6.4m). The GBP6.4m previously recognised
was in relation to employee and other liabilities recognised as
part of the business combination which have now expired and have
been released in full.
8. Financial instruments
Six months Six months Year to
to 28 February to 28 February 31 August
2022 (unaudited) 2021 (unaudited) 2021
(audited)
GBPm GBPm GBPm
Financial assets
Derivative assets used for hedging
at fair value 55.5 42.4 36.9
Amortised cost(1) 71.8 72.1 49.2
Cash and cash equivalents 406.7 92.0 662.7
Financial liabilities
Derivative liabilities used for
hedging at fair value (8.3) (35.4) (17.8)
Lease liabilities (345.1) (329.6) (328.9)
Amortised cost(2) (1,442.2) (861.3) (1,462.3)
------------------ ------------------ -----------
(1) Financial assets at amortised cost include trade and other
receivables but exclude prepayments
(2) Financial liabilities at amortised cost include trade
payables, accruals, borrowings, provisions and other payables
8. Financial instruments (continued)
The Group operates internationally and is therefore exposed to
foreign currency transaction risk, primarily on sales denominated
in US Dollars, Euros, Australian Dollars and Russian Roubles. The
Group's policy is to mitigate foreign currency transaction
exposures where possible and the Group uses financial instruments
in the form of forward foreign exchange contracts and vanilla
options to hedge future highly probable foreign currency cash
flows.
These forward foreign exchange contracts are classified above as
derivative financial assets and liabilities and are classified as
Level 2 financial instruments under IFRS 13, "Fair Value
Measurement." This is consistent with the prior period. There have
been no transfers between fair value levels in the period. They
have been fair valued at 28 February 2022 with reference to forward
exchange rates that are quoted in an active market, with the
resulting value discounted back to present value. The approach to
fair valuation can be seen within the Group's Annual Report and
Accounts for the year ended 31 August 2021. All forward foreign
exchange contracts were assessed to be highly effective during the
period to 28 February 2022. All derivative financial liabilities at
28 February 2022 mature within three years based on the related
contractual arrangements.
The Group has in place a GBP350.0m revolving credit facility
(RCF) available until July 2024. At 28 February 2022 the Group had
drawn down GBPnil of the RCF (31 August 2021: GBPnil).
9. Business combination
On 4 February 2021, the Group acquired the trade and assets of a
number of businesses from the administrators of Arcadia Group
Limited. The businesses were purchased out of administration for
total consideration of GBP292.4m.
Purchase consideration Restated Adjustments to As previously
provisional figures reported
GBPm GBPm GBPm
------------------------------ --------- --------------------- --------------
Cash paid 264.8 - 264.8
Contingent consideration 27.6 - 27.6
------------------------------ --------- --------------------- --------------
Total purchase consideration 292.4 - 292.4
------------------------------ --------- --------------------- --------------
The fair value of assets and liabilities acquired was GBP258.3m.
This includes GBP219.4m in relation to the Topshop, Topman, Miss
Selfridge and HIIT brands and GBP38.9m of other net assets. The
fair value of assets acquired was less than the fair value of the
consideration by GBP34.1m, which has been recognised as goodwill.
The goodwill is attributable to the workforce, the high
profitability of the acquired business and expected synergies. It
will not be deductible for tax purposes.
9. Business combination (continued)
The assets and liabilities recognised as a result of the
acquisition at 4 February 2021 are as follows:
Fair value of net Adjustment to As previously
assets acquired Restated (final) provisional figures reported
GBPm GBPm GBPm
------------------------- ------------------- --------------------- --------------
Intangible assets(1) 243.8 - 243.8
Inventories 25.5 (2.1) 27.6
Total assets acquired 269.3 (2.1) 271.4
Contingent liability (6.4) - (6.4)
Deferred tax liability (4.6) - (4.6)
Total liabilities
acquired (11.0) - (11.0)
------------------------- ------------------- --------------------- --------------
Net identifiable assets
acquired at fair value 258.3 (2.1) 260.4
------------------------- ------------------- --------------------- --------------
Goodwill arising on
acquisition 34.1 2.1 32.0
------------------------- ------------------- --------------------- --------------
Purchase consideration
transferred 292.4 - 292.4
------------------------- ------------------- --------------------- --------------
(1) Intangible assets include brands of GBP219.4m relating to Topshop,
Topman, Miss Selfridge and HIIT and reflects their fair value at
the acquisition date. They are estimated to have a useful economic
life of between 10 and 30 years. Also acquired were wholesale customer
relationships with a fair value of GBP24.4m which are estimated
to have a useful economic life of 8 years.
Separately to the acquisition of the trade and assets outlined
above, the Group also agreed to assume a number of purchase orders
that were placed with suppliers by the Arcadia Group prior to the
acquisition. Inventory amounts have been recorded in line with the
requirements of IAS 2 upon receipt, when control transfers.
In accordance with IFRS 3, 'Business combinations' the
acquisition accounting has now been finalised.
a) Acquisition related costs
Acquisition-related costs of GBP2.0m were incurred and have been
included in administrative expenses in the statement of profit or
loss and in operating cash flows in the statement of cash flows for
the year ended August 2021.
b) Contingent consideration
The contingent consideration arrangements primarily relate to
amounts ASOS.com will pay to the Arcadia administrators in relation
to qualifying inventory totalling GBP21.6m upon collection.
Following the acquisition, in FY21 a GBP1.4m reduction to inventory
consideration was agreed in relation to inventory sourced from
Arcadia Sourcing Regions not in line with ASOS.com's sourcing
strategy, or where ethical concerns existed. As at 28 February 2022
the consideration amounts have been settled in full.
c) Contingent liability
A contingent liability of GBP6.4m was recognised in relation to
employee and other liabilities. The Group's assessment of the fair
value of these liabilities represents the probability adjusted
possible outcome. As at 28 February 2022 the risk has fully expired
and the provision has been released.
10. Related parties
The Group's related party transactions are with the Employee
Benefit Trust, Link Trust, key management personnel and other
related parties as disclosed in the Group's Annual Report and
Accounts for the year to 31 August 2021. There have been no
material changes to the Group's related party transactions during
the six months to 28 February 2022.
11. Post balance sheet events
On 2 March 2022 the Group announced its intention to cease
trading with Ukraine and Russia given the ongoing conflict, as the
circumstances arose after the reporting date the event has been
concluded to be non-adjusting. The exclusion of Russia is expected
to reduce full year revenue growth by approximately 2% and adjusted
profit before tax by GBP14m.
12. Alternative performance measures (APMs)
ASOS uses the below non-IFRS performance measures to allow
shareholders to better understand underlying financial performance
and position. These should not be seen as substitutes for IFRS
measures of performance and may not allow a direct comparison to
other companies.
Performance Definition How we use the measure
measure
---------------- ------------------------------------------- ------------------------------------
Retail sales Internet sales recorded net of A measure of the Group's trading
an appropriate deduction for actual performance focused on the
and expected returns, relevant sale of products to end customers.
vouchers and sales taxes. Used by management to monitor
overall performance across
markets, and the basis of
key internal KPIs such as
ABV.
---------------- ------------------------------------------- ------------------------------------
Adjusted EBIT Profit before tax, interest, and A measure of the Group's underlying
the adjusting items defined below. profitability for the period,
Adjusted EBIT margin is the Adjusted as well as the basis for ASOS'
EBIT divided by total sales. medium term targets as set
out at the CMD on 10 November
2021.
---------------- ------------------------------------------- ------------------------------------
Adjusted profit Profit before tax and the adjusting A measure of the Group's underlying
before tax items defined below. profitability for the period
and used by management to
monitor the performance and
profitability of the business
each month.
---------------- ------------------------------------------- ------------------------------------
Net cash/(debt) Cash and cash equivalents less A measure of the Group's liquidity.
any borrowings drawn down at period-end,
but excluding outstanding lease
liabilities.
---------------- ------------------------------------------- ------------------------------------
Adjusted free Adjusted free cash flow is net A measure of the underlying
cash flow cash generated from operating activities, cash generated by ASOS outside
adjusted for payments to acquire cash flows relating to financing
intangible and tangible assets, transactions, and excluding
the payment of the principal portion the impact of non-underlying
of lease liabilities, and finance transactions.
expense paid, but excluding the
payment of adjusting items.
12. Alternative performance measures (APMs) (continued)
Adjusting items
To calculate the alternative performance measures listed above,
adjustments have been made for items of income or expenditure
arising from activities outside the ordinary course of business.
These items are quantitatively or qualitatively material, and
incremental or unusual in nature, meaning they do not reflect the
business' usual cost base.
- 'ASOS Reimagined', a multi-year programme which will enable
the business to accelerate delivery of its strategy and medium term
plan through the resetting, restructuring, and reimagining of ASOS'
operating model, brands, relationships and platforms. This is
expected to last for at least the next 12 months, with costs
expected to be GBP10m-GBP15m in H2 FY22.
- ASOS' transition to the Main Market of the London Stock
Exchange, which was completed on 22 February 2022.
- The release of a contingent liability relating to employee and
other costs, which was originally recognised as part of the Topshop
acquisition in February 2021.
- A one-off, non-cash, impairment charge relating to the
right-of-use assets and associated fixtures and fittings at part of
the ASOS' Leavesden office. This is required under IAS 36 as a
result of the decision to vacate and sublet part of the building to
third parties.
- Amortisation of acquired intangible assets is also adjusted
for as the acquisition the amortisation relates to was outside
business-as-usual operations for ASOS. Across the industry this is
included as an adjusting item and therefore to aid comparability
ASOS has adopted the same approach.
Independent review report to ASOS Plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed ASOS Plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
Interim results of ASOS Plc for the 6 month period ended 28
February 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated unaudited statement of financial position as at 28 February 2022;
-- the consolidated unaudited statement of total comprehensive income for the period then ended;
-- the consolidated unaudited statement of cash flows for the period then ended;
-- the consolidated unaudited statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results
of ASOS Plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim results, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the Interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
11 April 2022
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